context: Beijing looks to develop a third pillar of the retirement regime—individual pension target funds, in addition to state- and corporate-sponsored basic pension programs and enterprise and occupational annuities. But for many analysts, regulation-setting steps must proceed in tandem with growing pension funds to create a well-functioning market.

As of now, Chinese Securities Regulatory Committee (CSRC) has approved 26 pension target funds; five funds completed the initial closing and began operations, in which 180,000 individual investors are involved, explains Li Chao 李超 CSRC vice president. More pension target funds and public offering of pension funds will be available in the aged care market because the government is in favour of offering the option of individual retirement plans to complement state- and corporate-sponsored programs, adds Li. This growing business sector needs to be properly regulated, says Li, and CSRC will

  • unveil a document explaining basic rules for public offering of individual income tax-deferred pension funds
  • launch a public disclosure platform for these pension investment products

As of September 2018, approximately 166 million basic pension funds, enterprise annuities and social security funds are under the management of private mutual fund companies, reports Xinhua. According to Dong Ke 董克 Renmin University School of Public Administration dean, cultivating individual pension funds has four strengths

  • incentivising individual consumers to opt for the capital market (instead of their savings accounts) as the main source of basic income after retirement, which will help to bring down overly high savings rates
  • increasing individual investors’ gains from mutual funds vis-a-vis funds companies
  • curbing mutual funds’ speculative activities (because pension funds are long-term value investments)
  • cultivating a stable client base for mutual funds

The pension fund public disclosure platform, as a key infrastructure of the pension regime, should be transparent and consistent, says Dong. Dong also recommends